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Airline Stock Roundup: Q1 Earnings Beat at AAL, LUV, ALK & SKYW

Maharathi Basu

In the past week, several airline companies like American Airlines Group AAL, Southwest Airlines LUV, Alaska Air Group ALK, SkyWest SKYW and Spirit Airlines SAVE released their respective first-quarter 2019 financial numbers.

Apart from Spirit Airlines, all the above-mentioned carriers reported better-than-expected earnings per share. However, shares of American Airlines declined due to its decision to slash its earnings guidance for 2019. American Airlines now expects 2019 earnings per share between $4 and $6 (earlier outlook:  $5.50-$7.50). Updates on Boeing 737 MAX jets and fuel costs induced the company to slash its earnings guidance.

Spirit Airlines too issued a disappointing view with respect to cost per available seat mile (CASM), excluding fuel (non-fuel unit costs), for the second quarter. Notably, the construction work scheduled at the Ft. Lauderdale airport during 2019’s summer and a severe storm on Apr 19 were the primary reasons behind this bearish projection.

(Read the last Airline Stock Roundup here)

Recap of Past Week’s Most Important Stories

1. American Airlines’ first-quarter 2019 earnings (on an adjusted basis) of 52 cents per share edged past the Zacks Consensus Estimate by a penny. However, the bottom line decreased on a year-over-year basis due to high costs.  Revenues totaled $10,584 million, which missed the Zacks Consensus Estimate of $10,656.24 million but improved 1.8% on a year-over-year basis. Passenger revenues, which accounted for the bulk of the top line, rose 1.9%. (Read more: American Airlines Stock Down Despite Q1 Earnings Beat)

American Airlinescarries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Southwest Airlines delivered first-quarter 2019 earnings of 70 cents per share, which exceeded the Zacks Consensus Estimate of 61 cents. However, the bottom line declined year over year. Results were affected to the tune of approximately $150 million due to flight cancellations, effects of the government shutdown and softness in bookings.Operating revenues of $5,149 million outpaced the Zacks Consensus Estimate of $5,140.9 million and also rose 4.1% year over year. Passenger revenues, accounting for the bulk (92.2%) of the top line, improved 3.5% year over year. (Read more: Southwest Q1 Earnings & Revenues Top Despite Headwinds)

3. Alaska Air Group’s first-quarter 2019 adjusted earnings came in at 17 cents per share, which surpassed the Zacks Consensus Estimate of 13 cents. The bottom line also improved on a year-over-year basis. Revenues totaled $1,876 million and came above the Zacks Consensus Estimate of $1,872.97 million. The top line also rose year over year. The company anticipates capacity to rise approximately 1% in the second quarter of 2019. Additionally, unit revenues are estimated to increase in the 2-5% range in the same period. (Read more: Alaska Air Group Q1 Earnings Top, Q2 RASM View Up)

4. SkyWest’s first-quarter 2019 earnings (on an adjusted basis) of $1.33 per share surpassed the Zacks Consensus Estimate of $1.18. The bottom line also improved 29% on a year-over-year basis. Results benefited from the company’s fleet transition initiatives. Quarterly revenues came in at $724 million, beating the Zacks Consensus Estimate of $707 million. However, the top line declined year over year owing to the sale of ExpressJet Airlines in January 2019. Operating expenses also declined to 9.8% to $627 million. Expenses on salaries, wages and benefits decreased 16% to $257.6 million. (Read more: SkyWest’s Q1 Earnings & Revenues Surpass Estimates)

5. Spirit Airlines’ first-quarter 2019 earnings per share (excluding 2 cents from non-recurring items) of 84 cents came in line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved significantly on a year-over-year basis mainly owing to low fuel costs.

On the flip side, operating revenues of $855.8 million in the first quarter marginally missed the Zacks Consensus Estimate of $856.1 million. However, the top line improved 21.5% year over year on the back of a 16% rise in flight volume and favorable passenger yields, and load factor (% of seats filled by passengers). Passenger revenues, accounting for the bulk (97.9%) of the top line, jumped 21.6% year over year. (Read more: Spirit's Q1 Earnings Meet, CASM View Weak, Stock Down)

Performance

The following table shows the price movement of the major airline players over the past week and during the last six months. 

 

The table above shows that all airline stocks traded in the red over the past week resulting in a decline in the NYSE ARCA Airline Index. Over the course of six months, the NYSE ARCA Airline Index has depreciated 7%.

What's Next in the Airline Space?

Investors will await April traffic reports from the likes of Delta Air Lines DAL in the coming days.

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Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
 
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
 
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
 
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